When the Going Gets Tough,Tough CIOs Start Saving

Ann All

When the going gets tough, the tough start saving. That's a theme that comes through clearly in ComputerWeekly.com's interview with Paul Coby, the CIO of British Airways. Like many CIOs, Coby's IT budget was cut last summer, by about a third in his case. He's working with the same budget this year, though he doesn't expect further cuts.

 

About 140 million (U.S. $211 million) of his 200 million (U.S. $302 million) budget is devoted to operational spending, so Coby wants to drive that percentage down to free up more funds for more strategic projects.

 

He tells ComputerWeekly.com that virtualization helped BA reduce its number of physical servers, which has yielded savings -- though not yet enough to offset the purchase of new hardware to replace aged gear. Plenty of other CIOs chose to spend scarce tech dollars on virtualization last year.

 

He is also considering service-oriented architecture, which he thinks will help BA save money as it moves forward on a planned merger with Spanish carrier Iberia. As Coby says:

If you are thinking about a merger, a joint business or alliance -- as we are -- using SOA can help you avoid having to rebuild stuff at the back such as ERP, customer relationship management systems and ticketing. Rigorously applied SOA enables you to wrap the old back-ends and then be able to present that in different ways. You have your middleware layer, your customer records in different places and you are able to look at them and manage them in a coherent way.

That's pretty much the same point IT Business Edge contributor Loraine Lawson made last year. She noted that SOA, a technology approach prematurely pronounced dead by Burton Group analysts at the beginning of 2009, could help companies more effectively handle mergers -- which should result in reduced costs.

 


Cloud computing is another technology that Coby believes holds cost-cutting potential as well as offering added business flexibility. He isn't the only technology executive who thinks so. Two months ago when I asked Conrad Cross, CIO of the City of Orlando, Fla., about cloud computing, he told me:

The scalability, the speed in getting up and going, the operational dollar vs. the capital dollar, it's very compelling. And the ubiquity of today's devices, I can get to my data wherever I have Internet access. Access has gotten better, speed has gotten better, security has gotten better. I like Nicholas Carr's analogy about electrical power: Why generate your own when you can plug into the grid? It just makes sense.

When I first met him at our Midmarket CIO Forum, Cross explained cost savings factored into his decision to migrate his organization's e-mail from IBM's Lotus Notes to Google Apps. He used a formula from Forrester Research to determine that the cost of hosting the city's own Lotus Notes system was $133 a year per user. The enterprise version of Google Apps sells for $50 a year and in addition to e-mail includes Google Docs, Spreadsheets, Presentations, Sites, Talk and other features. With 3,000 users, that adds up to a significant savings.

 

Like BA's Coby, Cross experienced a budget cut in 2009, 12 percent in his case. He also lost 15 staff members. There's a silver lining to that kind of dark cloud, Cross said:

... The opportunity side of that is, it forces us to look at better ways of doing things. If we had all the money in the world, we might not have gone to Google Apps. Necessity causes you to stop and be more ingenious in the way you think and the way you do things.


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